How do you revive a struggling business? What are the things to do if your business is struggling?
The fact is that startup businesses struggle to survive for so many reasons and finance is one of them. However, a business might find itself in financial difficulties for many different reasons.
The market might slow due to the time of year, or even just one customer not paying their invoice on time could have a serious knock-on effect.
It could be a problem with a supplier, or just that fact that you have overspent on your budget and now don’t have enough money to pay for other important things.
Why do businesses struggle to survive?
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The problem is, if you can’t pay for supplies, you will find it hard to make any money because you will have nothing to sell. If you can’t pay the rent or energy bills, you might lose your office or store. You might not have enough money for gas, which means you can’t make deliveries or visit customers.
Finally, you might not have enough money to pay your employees – and yourself – meaning that you lose your workforce (and are potentially sued too). Therefore, it is imperative that you know how to turn things around when your business is struggling, or at least how to stop things from getting worse.
Even the wisest of budgeters can come across problems that they have no control over, or that threaten to ruin their business, so having this advice to hand is always going to be useful.
#1]. Borrow Money
If your money is running low and you need some additional finances to see you through the rough patch in your business, then borrowing is the easiest way to ensure that you can get that cash quickly. There are many different ways that you can borrow money when you run a business.
A business loan is possibly the first idea that will come into your head when you are looking at how to raise extra capital for your business. In some cases, this can be the least expensive option, with lower interest rates, although this will depend on where you obtain the loan from. Traditional banks and other lenders will be able to offer some good deals, but they also have extremely strict lending criteria.
Other options include a business cash advance. This is possible if you have a credit card machine that you use to take payments within your business.
Not all merchant account companies and payment terminal providers will provide this service, but it is worth checking whether yours does as, for a short-term helping hand, it can be ideal.
A business cash advance is a money lent to your business by the merchant machine provider against future credit card payments that you are going to receive. Or what about stock loans? If you have stocks and shares that are simply sitting there, doing nothing, you may have considered selling them to fund your business for a little while.
However, this can be a problem because the market is so volatile, and you might not get as much for them as you had wanted. Plus, once they are sold, you will no longer have them to use as collateral for anything else.
A stock loan can be the ideal solution. A stock loan is where you can borrow money against your stocks and shares without having to sell them. Once you pay the money back, those stocks are yours again to do what you want with, whether that’s keeping them safe for future use, selling them, or borrowing once more. View here to see exactly how this kind of loan works.
#2]. Cut Costs
Sometimes borrowing money simply isn’t possible, or it won’t give you the long-term solution you are looking for when it comes to saving your business. If this is the case you will need to look at exactly what you are spending and try to cut costs wherever possible. This can begin with any unnecessary spending. It might be nice to have a top of the range company car, for example, or to take staff out every and Christmas for an expensive meal, but if it is causing you difficulties in keeping the business going, these expenses need to be eliminated.
Next look at what you are paying out for your utilities and your rent. Is there any way to reduce these costs? Price comparison sites will help you to check that you aren’t paying too much, and if you are you can change your energy supplier or try to negotiate a better deal with your current one.
Rent is a different situation because this is down to market forces plus what the landlord wants or needs. If you are having trouble, it is important that you arrange a meeting with your landlord to discuss the issue – they need to be made aware of what is happening, especially if you think you are going to be unable to pay the rent now or in the future.
It might be that you need to seek cheaper premises or eliminate having premises at all and work from home. However, it might be that your landlord would rather have you pay a reduced rent for a short period of time than have the premises sit empty. This is why it is important to discuss the options.
Finally, cutting costs might involve letting people go, and this is always a last resort but sometimes exactly what a business needs to become profitable again. Sometimes businesses grow too quickly, which is not always anyone’s fault, and sometimes the news or the time of year causes problems. If one or two salaries is what it takes to keep the business running, and saves many more jobs in the process, then it will need to be done.
#3]. Better Customer Experience
Sometimes it is not the product or service, and not the prices involved, or any other external factor that means a business starts to fail and lose money. Sometimes it is simply the way you are working. This is good news because it means that you can change things around and make your business profitable again, even if it takes a little effort and hard work.
If you aren’t offering your customers a good experience when they purchase from you, they will be reluctant to come back again. They won’t tell their friends and family about how much they enjoyed working with you or buying from you. Neither will they leave a good review, or shout about how good your business is on social media.
If this is missing, you are missing out on a major component of your marketing – a major component that you don’t have to pay for. You can see, therefore, why it is so important to keep your customers happy at all times.
You may need to give your staff some additional training when it comes to customer service or implement some new strategies that mean your customers have a much better experience buying from you than they did before and – importantly – better than if they had gone to your competitors.
#4]. Stick To The Budget
Making a budget is important in business, and you may well have done so right at the start when you were working out what you needed to spend to get up and running. When, however, was the last time you looked at that budget, assuming it even exists?
It could be a very long time, and the figures that you have in your head might be completely out of date. If you’re wondering why, for example, you’re making a loss even though you’re hitting the sales targets that you know you worked out right at the start, it is likely that your costs have risen and that these have not been taken into account.
Therefore, if you are failing and you just don’t know why taking a good look at your budget is hugely important. It will show you where the figures are out of date, and if you fill in the correct numbers, you’ll get a much more accurate profit level, and then you will be able to work out the next step. You might need to put your prices up, for example, because they aren’t covering their costs anymore.
Is it your marketing that is causing your business to fail? It might be. A business that doesn’t market itself will never be able to compete with those that do, which is why some marketing is absolutely vital if you want to succeed. However, not marketing to the right people, and not showing those people what it is that you really can do for them, means you are wasting your marketing budget and causing problems for your own business.
The first step is to determine your target market. Once you know who the people are who are most likely to buy from you, you can then focus your marketing directly on them. This can be done literally when you are working on social media such as Facebook, for example, as you can target your ads towards the people who will buy from you.
Otherwise, it is important to make sure that your marketing speaks to them directly. What age are they? What gender? Are they parents? Couples? Single professionals? This is all-important. Finally, you will need to test and measure your marketing. You might think that your advertising is bringing in business and paying for itself, but unless you are testing and measuring the results, you will never know for sure.